Retail 101: Don’t forget the swing tag
distracting us from fundamentals such as product, price and service?
Amongst Australia’s leading retailers, from fashion to homewares and toys, we have seen an endless re-platforming of old systems onto open source platforms like Magento, Shopify or Demandware. Everyone talks about striving to be the leader in technology, having the best systems and pushing the boundaries. Ironically, this mass move to open source platforms means everyone’s systems are very similar – everyone has the same opportunities to more easily plug in new features.
Instead of creating the desired technology edge, this environment is forcing a return to retail 101. When technology begins to lose its competitive edge, product, price and service are everything.
Over the past 12 months, I have noticed a trend towards the introduction of very complex and costly features to implement, such as real-time inventory for click and collect or endless aisle.
Despite the aggressive predictions to the contrary, the introduction of online retail channels and expensive digital bells and whistles have not led to the decline of traditional retail. Rather, we are seeing the rise of omnichannel retailing. Offline retail is performing very well and omnichannel even better, with online feeding bricks-and-mortar and vice versa.
Rather than building the shiny new technology feature, maybe it’s better to focus on something simple, like the swing tag.
I always learn a lot from watching my wife shop. Here is what I believe are her key junctures in her purchase process:
An inviting shop front
Shop fitouts are incredible these days. The fitouts are experiential and play to all emotions. However, while shop fitouts drive foot traffic, they don’t convert the sale.
Product needs to sell itself
Unlike online where you can create your own campaign or speak to your customers through digital creative, in physical retail, the product must sell itself. The design of the product drives the purchase interest; however, it doesn’t close the sale.
The price tag
To me, the price tag is key. Every time my wife sees a product she likes, she reaches directly for the price tag almost as if to say ‘I refuse to get emotionally connected to this product until the price says I’m allowed to be emotionally connected to this product’. Why is the price tag neglected if it is such a core component of closing the sale in the purchase process?
When you consider the basic principles of layby, the service can help a customer manage their budget and cash flow to buy what they want. The only issue with traditional layby is the storage and administrative headache for retailers. Customers would rather take the product home straight away and wear it, or use it, on the weekend. Now, digital ‘buy now pay later’ layby options mean that the customer has all the benefits of layby, but they receive their product straight away.
Put simply, speaking to the customer at the time when they turn the swing tag over to see the price to say ‘you don’t have to pay full price right now’ is the key – price is the ultimate decision juncture, yet it is forgotten.
HypeDC is an incredible business because they have engaged their cult-like customer following and built a powerful relationship through product. Princess Polly is another example of brilliant retail. They provide super-fast fashion, introducing new product daily and engaging better than anyone else across all social channels. These are next generation millennial retailing at its best. But it is still retail 101.
Retail hasn’t changed – product, service and price are still key.
Nick Molnar is co-founder and CEO of Afterpay Holdings Ltd, an ASX-listed Australian fintech business. Prior to founding Afterpay, Nick launched leading American online jeweller, Ice.com, into Australia which he successfully grew to become the largest online-only jewellery and watch retailer.